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T.L. Wilson and Co. Vs. Hari Ganesh Joshi - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberCivil Application No. 106 of 1938
Judge
Reported inAIR1939Bom250; (1939)41BOMLR410
AppellantT.L. Wilson and Co.
RespondentHari Ganesh Joshi
DispositionPetition allowed
Excerpt:
attorney - costs-summary proceeding-agreement to recover full amount of taxed costs in event of success-validity of agreement-champerty-recovery of taxed costs from deposit-deposit under civil procedure code (act v of 1908), order xlv, rule 7-solicitors act (22 and 23 geo. v, c. 37), section 63.;an agreement between a solicitor and his client whereby the former agrees to work on a smaller sum of money as fees and costs on condition that in the event of success he should recover the full amount of taxed costs from his client is neither invalid nor unenforceable in law or in practice.;it is open to a solicitor to recover the amount of his taxed bill of costs by a summary proceeding from out of the deposit made in the high court by the unsuccessful party under order xlv, rule 7, of the civil..........was helpless and poor, the solicitors agreed to defend the appeal for a sum less than, the full taxed costs, but at the same time stipulated that they should be paid full costs in the event of success. the terms of the agreement are thus set out in their letter dated july 27, 1933 :in the circumstances we are willing to defend the appeal for 100. you will understand that this is a considerably reduced fee. in the event of success we shall expect to be paid the difference between the 100 and the taxed party and party costs which will be inserted in his majesty's order.3. it may be noted that the amount deposited by the appellant is sufficient to pay the full taxed costs ; and the depositor of the security in court, namely, the appellant in the privy council appeal, has no objection to.....
Judgment:

Wassoodew, J.

1. This is a petition made by Messrs. T.L. Wilson & Co., Solicitors of London, who had acted on behalf of one Sitabai, widow of Ramchandra Sadashiv Khare, respondent in a Privy; Council Appeal No. 57 of 1934, which was decided in her favour on April 13, 1937, for payment of the balance of the costs not received from their client or her executors out of the security deposited in this Court by the appellant under the provisions of Order XLV, Rule 7, of the Civil Procedure Code, 1908.

2. The petitioners allege that they have received 100 from the respondent Sitabai towards their legal charges and an extra sum of 2 from her executors after her death when they were brought on record in her place, and that they are entitled, under the terms of their agreement, to the difference between that sum and the sum taxed in the Bill of Costs in the Order in Council, the total sum payable under that order being 199 3s. 9d. It seems that under pressure and persuasion of Sitabai's agent, one K. N. Dharap, an advocate of this Court who represented that she was helpless and poor, the solicitors agreed to defend the appeal for a sum less than, the full taxed costs, but at the same time stipulated that they should be paid full costs in the event of success. The terms of the agreement are thus set out in their letter dated July 27, 1933 :

In the circumstances we are willing to defend the appeal for 100. You will understand that this is a considerably reduced fee. In the event of success we shall expect to be paid the difference between the 100 and the taxed party and party costs which will be inserted in His Majesty's order.

3. It may be noted that the amount deposited by the appellant is sufficient to pay the full taxed costs ; and the depositor of the security in Court, namely, the appellant in the Privy Council appeal, has no objection to the payment of the amount claimed by the solicitors out of the money deposited. But the objection proceeds from the executors of Sitabai, in whose favour the order of costs was made by the Privy Council, on the ground that the terms of the contract were not properly explained to, and accepted by, the deceased Sitabai, that such a contract is void and illegal and that the relief claimed should not be given in these summary proceedings.

4. We are satisfied upon the affidavits of Nagarkar and Dharap and the correspondence produced that the terms set out in that letter were explained to, and accepted by, Sitabai and that her acceptance was conveyed to the solicitors by Dharap, her agent, on September 15, 1933, in these terms :

I am glad to say that she has accepted all your terms. Particularly I may mention to you that she is quite willing to accept your term about the fees, viz., that in case we succeed she will give to you the difference between 100 and the costs that will be taxed. In case of success you will have earned them and the client has no right to claim them.

5. In accordance therewith the amount settled was remitted and the appeal was defended by the solicitors. Nagarkar, who is a close relative and a respectable gentleman, has in his affidavit supported the statement of Dharap that Sitabai appreciated the contents of the letter of the solicitors and agreed to abide by the terms. It is alleged that the proposals disclosed by the solicitors letter amount only to a bare expectation and are no part of the terms of the contract. The expression 'We shall expect to be paid' is a courteous way of saying that it shall form a term in the contract. It is misnomer to say it is a nudum pactum as counsel for the opponents has characterised it. A nudum pactum is a promise not supported by consideration. The agreement to pay or pay something on one side without any compensation either in service or in any other manner will certainly not support an action. But it has always been recognised that for service undertaken at the request of the promisor who has enjoyed the benefit of the service, an action for compensation will lie for it is not a bare promise.

6. We think that the contract in question is enforceable in law. Here we are dealing with a special agreement between a solicitor and his client. The validity of such an agreement will depend in England upon; the Solicitors' Act (1932) 22 & 23 Geo. V, c. 37. That Statute prescribes the terms on which such agreements should be held valid. The relevant provisions in that Act are contained in Section 63. It says :

(i) Nothing in the four last preceding sections of this Act shall give validity to..

(ii) any agreement by which a solicitor retained or employed to prosecute any action, suit or other contentious proceeding stipulates for payment only in the event of success in that action, suit or proceeding.

7. That is a provision against champertous agreement which is not the case here. The agreement is neither opposed to any principle of common law as applicable to the remuneration of solicitors in India who receive reasonable remuneration after its being taxed by the Master in Equity and the Taxing Officer. All that is demanded here by the solicitors is extra payment in the event of success but not in excess of the taxed costs. The relevant section in the Act would be Section 60, Clause (1)(i) and (ii), and the provisions of that section are not offended against in the present case. It is said that such an agreement is as offensive as an agreement to receive reward in the event of success and Courts should discourage it. The argument is based on false analogy. Where undue influence is not apparent and the solicitor has agreed to accept taxed costs in the event of success so as to lighten the burden on his client in the event of failure, the agreement could not be looked upon with disfavour, and the Court will respect the terms of such an agreement of employment. Therefore, neither in practice nor in law such an agreement can be regarded as invalid or unenforceable.

8. There then remains the question whether we should not exercise our summary powers in a claim of this kind, assuming it is essentially not one to enforce a solicitor's subsisting lien. The petition is for payment out of the security for costs which is required as a condition precedent to the grant of a certificate in all appeals taken to the Privy Council. The object of the security is obviously to secure the successful party against costs awarded to him in terms of the Order in Council. The amount is in the custody of the Court and can, be paid out in terms of the security and! in compliance with the Order in Council. Perhaps in complicated cases a Court would be justified in refraining from exercising its powers summarily. But the fact that it does possess such powers to distribute the amount to the successful party cannot be disputed having regard to the terms of the deposit and the provisions of Order XLV, Rule 7, of the Civil Procedure Code. If authority were needed, I would refer to Bikrmmkishore Manikya v. Ali Ahmad I.L.R. (1930) Cal. 1034. There the High Court ordered the amount deposited as security to be paid to the respondent's solicitors in England in satisfaction of their bill of costs taxed before the Privy Council.

9. We, therefore, allow this petition and direct the payment of the costs from the deposit with the Registrar in terms of the prayer in the petition with costs which shall be paid by opponents Nos. 1 and 2. Opponent No. 3 will bear his own costs.


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